UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of
Report (Date of the earliest event reported)
May
6, 2009
Kronos
Worldwide, Inc.
(Exact
name of registrant as specified in its charter)
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Delaware
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1-31763
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76-0294959
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(State
or other jurisdiction of incorporation)
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(Commission
File
Number)
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(IRS
Employer
Identification
No.)
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5430
LBJ Freeway, Suite 1700, Dallas, Texas
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75240-2697
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(Address
of principal executive offices)
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(Zip
Code)
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Registrant’s
telephone number, including area code
(972)
233-1700
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(Former
name or former address, if changed since last report.)
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Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2):
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o
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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¨
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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¨
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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¨
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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Item
2.02
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Results
of Operations and Financial
Condition.
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Item
7.01
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Regulation
FD Disclosure.
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The
registrant hereby furnishes the information set forth in its press release
issued on May 6, 2009, a copy of which is attached hereto as Exhibit 99.1
and incorporated herein by reference.
The
information, including the exhibit, the registrant furnishes in this report is
not deemed “filed” for purposes of section 18 of the Securities Exchange Act of
1934, as amended, or otherwise subject to the liabilities of that
section. Registration statements or other documents filed with the
U.S. Securities and Exchange Commission shall not incorporate this information
by reference, except as otherwise expressly stated in such filing.
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Item
9.01
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Financial
Statements and Exhibits.
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(d)
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Exhibits
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Item
No.
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Exhibit
Index
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99.1
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Press
release dated May 5, 2008 issued by the
registrant.
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SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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Valhi,
Inc.
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(Registrant)
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By: /s/ Gregory M.
Swalwell
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Date: May
6, 2009
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Gregory
M. Swalwell, Vice President and
Controller
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INDEX
TO EXHIBITS
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Item
No.
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Exhibit
Index
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99.1
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Press
release dated May 6, 2009 issued by the
registrant.
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Kronos
Worldwide, Inc.
Three
Lincoln Centre
5430
LBJ Freeway, Suite 1700
Dallas,
TX 75240-2697
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Contact: Gregory
M. Swalwell
Vice
President, Finance
(972) 233-1700
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News
Release
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FOR IMMEDIATE
RELEASE
KRONOS
WORLDWIDE REPORTS FIRST QUARTER RESULTS
DALLAS,
TEXAS…May 6, 2009…Kronos Worldwide, Inc. (NYSE:KRO) today reported a net loss
for the first quarter of 2009 of $26.6 million, or $.54 per diluted share,
compared with a net loss of $.4 million, or $.01 per diluted share, in the first
quarter of 2008. Net sales of $248.0 million in the first quarter of
2009 were $84.5 million, or 25%, lower than the first quarter of 2008 due
primarily to the reduced level of worldwide demand. Comparability of
the Company’s results was impacted by lower income from operations in the first
quarter of 2009 resulting principally from lower sales volumes and higher
manufacturing costs as a result of temporary plant curtailments during the first
quarter.
The
Company’s TiO2 segment
loss (see description of non-GAAP information below) for the first quarter of
2009 was $24.9 million compared with segment profit of $11.7 million in the
first quarter of 2008. First quarter segment profit declined due to
the negative effects of production curtailments, which resulted in significantly
higher manufacturing costs per ton of pigment production. Lower
TiO2
sales volumes also had a negative impact on segment profit for the first
quarter. The decline in segment profit was partially offset by the
positive effects of higher TiO2 selling
prices, which were 5% higher in the first quarter of 2009 as compared to the
first quarter of 2008, and the favorable effects of fluctuations in foreign
currency exchange rates, which increased segment profit by approximately $28
million. The table at the end of this press release shows how each of
these items impacted the overall decrease in sales.
The
Company’s first quarter 2009 TiO2 sales
volumes decreased 24% from the first quarter of 2008, as a result of declining
demand in all markets. The Company’s TiO2 production
volumes were 52% lower in the first quarter of 2009 as compared to the first
quarter of 2008, with operating rates at approximately 50% of capacity for the
first quarter of 2009. Finished goods inventories at March 31, 2009
were 28% below inventory levels of December 31, 2008 and comparable to inventory
levels at the end of the first quarter of 2008.
Steven L.
Watson, Vice Chairman and Chief Executive Officer, said, “We lowered our
production rates in the first quarter to reduce our finished goods inventories
to an appropriate level necessary to meet current business requirements in each
of our markets. The lower production volumes significantly impacted
cost of sales for unabsorbed fixed production costs. We expect our
production rates to significantly increase in the second quarter and the
remainder of 2009, to match customer demand, including recent increases across
our key market segments. We anticipate the higher capacity
utilization will significantly decrease our per unit fixed cost of
production. While the current economic downturn is negatively
affecting all TiO2 producers, we believe the decrease in production capacity in
the industry, through the closure of inefficient facilities and temporary
production curtailments, will result in improved operating and financial
performance.”
The
statements in this release relating to matters that are not historical facts are
forward-looking statements that represent management's beliefs and assumptions
based on currently available information. Although the Company
believes that the expectations reflected in such forward-looking statements are
reasonable, it cannot give any assurances that these expectations will prove to
be correct. Such statements by their nature involve substantial risks
and uncertainties that could significantly impact expected results, and actual
future results could differ materially from those described in such
forward-looking statements. While it is not possible to identify all factors,
the Company continues to face many risks and uncertainties. The
factors that could cause actual future results to differ materially include, but
are not limited to, the following:
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·
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Future
supply and demand for our products
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·
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The
extent of the dependence of certain of our businesses on certain market
sectors
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·
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The
cyclicality of our businesses
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·
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Customer
inventory levels (such as the extent to which our customers may, from time
to time, accelerate purchases of TiO2 in
advance of anticipated price increases or defer purchases of TiO2 in
advance of anticipated price
decreases)
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·
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Changes
in raw material and other operating costs (such as energy
costs)
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·
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General
global economic and political conditions (such as changes in the level of
gross domestic product in various regions of the world and the impact of
such changes on demand for TiO2)
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·
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Competitive
products and substitute products
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·
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Customer
and competitor strategies
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·
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Potential
consolidation or solvency of our
competitors
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·
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The
impact of pricing and production
decisions
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·
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Competitive
technology positions
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·
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Possible
disruption of our business or increases in the cost of doing business
resulting from terrorist activities or global
conflicts
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·
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The
introduction of trade barriers
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·
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Fluctuations
in currency exchange rates (such as changes in the exchange rate between
the U.S. dollar and each of the euro, the Norwegian krone and the Canadian
dollar)
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·
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Operating
interruptions (including, but not limited to, labor disputes, leaks,
natural disasters, fires, explosions, unscheduled or unplanned downtime
and transportation interruptions)
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·
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The
timing and amounts of insurance
recoveries
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·
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Our
ability to renew or refinance credit
facilities
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·
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Our
ability to maintain sufficient
liquidity
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·
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The
ultimate outcome of income tax audits, tax settlement initiatives or other
tax matters
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·
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The
ultimate ability to utilize income tax attributes, the benefits of which
have been recognized under the more-likely-than-not recognition
criteria
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·
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Environmental
matters (such as those requiring compliance with emission and discharge
standards for existing and new
facilities)
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·
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Government
laws and regulations and possible changes
therein
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·
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The
ultimate resolution of pending
litigation
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·
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Possible
future litigation
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Should
one or more of these risks materialize (or the consequences of such a
development worsen), or should the underlying assumptions prove incorrect,
actual results could differ materially from those forecasted or
expected. The Company disclaims any intention or obligation to update
or revise any forward-looking statement whether as a result of changes in
information, future events or otherwise.
In an
effort to provide investors with additional information regarding the Company's
results of operations as determined by accounting principles generally accepted
in the United States of America (“GAAP”), the Company has disclosed certain
non-GAAP information, which the Company believes provides useful information to
investors:
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·
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The
Company discloses segment profit (loss), which is used by the Company’s
management to assess the performance of the Company’s TiO2
operations. The Company believes disclosure of segment
profit (loss) provides useful information to investors because it allows
investors to analyze the performance of the Company’s TiO2
operations in the same way that the Company’s management assesses
performance. The Company defines segment profit (loss) as
income (loss) before income taxes, interest expense and certain general
corporate items. Corporate items excluded from the
determination of segment profit (loss) include corporate expense and
interest income not attributable to the Company’s TiO2
operations.
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Kronos
Worldwide, Inc. is a major international producer of titanium dioxide
pigments.
KRONOS
WORLDWIDE, INC.
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(In
millions, except per share and metric ton data)
(Unaudited)
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Three
months ended
March
31,
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||||||||
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2008
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2009
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Net
sales
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$ | 332.5 | $ | 248.0 | ||||
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Cost
of sales
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275.4 | 243.9 | ||||||
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Gross
margin
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57.1 | 4.1 | ||||||
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Selling,
general and administrative expense
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43.3 | 34.3 | ||||||
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Other
operating income (expense):
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||||||||
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Currency
transactions, net
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(2.5 | ) | 5.3 | |||||
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Corporate
expense
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(1.6 | ) | (1.4 | ) | ||||
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Income
(loss) from operations
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9.7 | (26.3 | ) | |||||
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Other
income (expense):
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||||||||
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Trade
interest income
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.4 | - | ||||||
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Interest
expense
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(10.6 | ) | (9.7 | ) | ||||
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Loss
before income taxes
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(.5 | ) | (36.0 | ) | ||||
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Income
tax benefit
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(.1 | ) | (9.4 | ) | ||||
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Net
loss
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$ | (.4 | ) | $ | (26.6 | ) | ||
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Net
loss per basic and diluted share
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$ | (.01 | ) | $ | (.54 | ) | ||
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Basic
and diluted weighted-average shares used in the calculation of net
income per share
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49.0 | 49.0 | ||||||
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TiO2 data
– metric tons in thousands:
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Sales
volumes
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127 | 97 | ||||||
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Production
volumes
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132 | 64 | ||||||
KRONOS
WORLDWIDE, INC.
RECONCILIATION
OF SEGMENT PROFIT TO
INCOME
FROM OPERATIONS
(In
millions)
(Unaudited)
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Three
months ended
March
31,
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||||||||
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2008
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2009
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Segment
profit (loss)
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$ | 11.7 | $ | (24.9 | ) | |||
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Adjustments:
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||||||||
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Trade
interest income
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(.4 | ) | - | |||||
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Corporate
expense
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(1.6 | ) | (1.4 | ) | ||||
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Income
(loss) from operations
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$ | 9.7 | $ | (26.3 | ) | |||
IMPACT OF
PERCENTAGE CHANGE IN SALES
(Unaudited)
|
Three
months ended
March
31,
2009 vs. 2008
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||||
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Percent
change in sales:
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||||
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TiO2
product pricing
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5 | % | ||
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TiO2
sales volume
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(24 | ) % | ||
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TiO2
product mix
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(2 | ) % | ||
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Changes
in foreign currency exchange rates
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(4 | ) % | ||
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Total
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(25 | ) % | ||